In this article, we take a look at the top 10 real estate stocks to own according to LDR Capital.
Lawrence Raiman’s LDR Capital is a New York-based hedge fund that specializes in REIT investments. The fund believes REITs to be a structurally mispriced asset class and seeks to capitalize on opportunities within the sector through bottom-up security analysis and active management. Mr. Raiman, LDR Capital’s Managing Principal, CIO, and Portfolio Manager, previously ran Credit Suisse’s Global Real Estate Securities business, where he managed $2.6 billion in assets.
The LDR Preferred Income Fund A, which employs an absolute return strategy and has historically provided clients with low volatility, has delivered compound annual returns of 6.6% from its inception in July 2009 through March 2020. 2019 was one of the fund’s best years to date, as it posted gains of 20.49%. The fund was up by 7.66% in 2017 but followed that up by posting a nearly identical loss of 7.69% in 2018. LDR Capital had $668 million in assets under management as of March 29, 2021.
As of September 30, 2021, 86% of LDR Capital’s 13F assets were invested in the real estate sector, making it the fund’s least diversified portfolio in over 4 years. The fund was bullish on the market during the third quarter, adding to several of its positions while selling shares from just a handful of its holdings. That buying activity boosted the value of the LDR Capital’s 13F portfolio to $177 million as of September 30, a greater than 10% boost. Given the fund’s conviction in real estate stocks and REITs, we’re going to check out its 10 favorite real estate stocks in this article.
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Our Methodology
We follow hedge funds like LDR Capital because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns. Let’s check out the top 10 real estate stocks to own according to LDR Capital. Note that all hedge fund data is based on the exclusive group of 800+ funds tracked by Insider Monkey as part of our market-beating investment strategy.
Top 10 Real Estate Stocks to Own According to LDR Capital
10. Office Properties Income Trust (NASDAQ:OPI)
Office Properties Income Trust (NASDAQ:OPI) is the first real estate stock to own on our list, as LDR Capital owns 281,044 shares of the REIT worth $7.12 million at the end of Q3. That also gave it the largest position in OPI among the 850+ hedge funds tracked by Insider Monkey’s database.
Office Properties Income Trust (NASDAQ:OPI) added two long-term leased office properties in Chicago and Atlanta to its portfolio during the second quarter for $550 million while unloading three of its underperforming properties for $46 million. Office Properties Income Trust (NASDAQ:OPI) also added 548,000 square feet of new and renewal leasing during the period.
9. Americold Realty Trust (NYSE:COLD)
LDR Capital raised its Americold Realty Trust (NYSE:COLD) stake by 20% during the third quarter of 2021, giving the fund 262,823 shares valued at $7.64 million on September 30. Other hedge funds have been vacating COLD during 2021, as nearly 50% of the hedge fund shareholders of the stock at the end of 2020 had sold it off nine months later.
In Baron Funds’ Baron Small Cap Fund investor letter for the third quarter of 2021, the fund lamented Americold Realty Trust (NYSE:COLD) weak financial results for Q3 and the resulting stock price fall, blaming food producers for their inability to produce enough to service customer demand for COLD’s cold storage warehouses. Nonetheless, the fund likes the long-term potential of Americold Realty Trust (NYSE:COLD) and believes it trades at a hefty discount to its private asset value.
8. Park Hotels & Resorts Inc. (NYSE:PK)
LDR Capital has 400,306 shares of Park Hotels & Resorts Inc. (NYSE:PK) in its 13F portfolio as of September 30, a position which at that time was valued at $7.66 million. 22 hedge funds in Insider Monkey’s database were long PK at the end of Q3, the highest total since the start of the pandemic.
Unsurprisingly, Park Hotels & Resorts Inc. (NYSE:PK) shares were hit hard following the global shutdowns and the demise of the travel industry, as Park Hotels & Resorts Inc. (NYSE:PK) operates 60 resorts and hotels that boast a total of 33,000 rooms. Hedge funds have become concerned about Park Hotels & Resorts Inc. (NYSE:PK)’s solvency, though Mason Hawkins believes the company will survive the pandemic.
7. RLJ Lodging Trust (NYSE:RLJ)
550,939 shares of RLJ Lodging Trust (NYSE:RLJ) were owned by LDR Capital at the end of September 2021, being worth $8.19 million at that time. Hedge fund ownership of RLJ has been cut in half over the last three years but has rebounded by 60% since the end of 2020.
RLJ Lodging Trust (NYSE:RLJ) management was pleased with the lodging industry’s continuing recovery in Q3, as RLJ Lodging Trust (NYSE:RLJ) beat consensus sales estimates with $233.8 million in revenue during the quarter. RLJ Lodging Trust (NYSE:RLJ) also made an accretive $500 million bond offering during the quarter, enhancing its ability to make acquisitions and drive growth during a period that is creating compelling opportunities for those bold enough to go after that.
6. RMR Group Inc (NASDAQ:RMR)
Closing out the first half of our list is RMR Group Inc (NASDAQ:RMR), a newly added stock to LDR Capital’s 13F portfolio during Q3. The fund bought 248,099 RMR shares, giving it a stake valued at $8.3 million as of September 30. As with many other REITs, numerous hedge funds have abandoned ship during the pandemic, with ownership of the stock down by 35% since the end of 2019.
RMR Group Inc (NASDAQ:RMR) had $32.7 billion in assets under management at the end of September, a slight uptick from a year earlier, while its management and advisory services revenue rose by 16.5% year-over-year to $46.8 million. RMR Group Inc (NASDAQ:RMR) is fairly well-positioned financially even after paying out a $7.00 per share special dividend in September, but is expected to pursue organic growth rather than larger-scale acquisitions.
5. Global Net Lease, Inc. (NYSE:GNL)
Global Net Lease, Inc. (NYSE:GNL) leads off the second half of our list of the top real estate stocks to own heading into 2022. Real estate investment gurus LDR Capital owned 542,419 shares of the stock on September 30, valued at $8.69 million at that time. Hedge fund ownership of the REIT has rebounded in 2021 after falling heavily in 2020.
Global Net Lease, Inc. (NYSE:GNL) impressed investors with its tenant profile after collecting 100% of its rents due during the months of April and May. However, the company’s slightly high leverage and externally managed structure have some hedge funds worried that the company will continue to face headwinds going forward.
4. Playa Hotels & Resorts N.V. (NASDAQ:PLYA)
LDR Capital owns just under 1.2 million shares of Playa Hotels & Resorts N.V. (NASDAQ:PLYA) as of September 30, a position worth $9.95 million at that time. Unlike other names in the sector, hedge funds have actually become more bullish on PLYA since the beginning of the pandemic and particularly in 2021, with ownership of the stock up by 44% during that time.
The builder and operator of resorts have rewarded investors with a strong showing this year, as Playa Hotels & Resorts N.V. (NASDAQ:PLYA)’s revenue surged by 426.4% during the third quarter, to $151.28 million, easily beating estimates. The company enjoyed higher rates during the quarter which is expected to continue into the fourth quarter and beyond thanks to burgeoning flight capacity into some of its most important locations.
3. MGM Growth Properties LLC (NYSE:MGP)
MGM Growth Properties LLC (NYSE:MGP) was one of three new stock positions added to LDR Capital’s 13F portfolio during Q3 and instantly became one of the fund’s most bullish bets as it bought 277,528 MGP shares which were worth $10.63 million on September 30. Other hedge funds have been selling out of MGP after shares rose by more than 50% between the middle of 2020 and the end of September 2021.
In December, MGM Growth Properties LLC (NYSE:MGP) announced another $0.02 per share increase to its quarterly dividend, to $2.10, the 15th such increase in less than six years following the company’s IPO in April 2016. The company’s Q3 revenue of $188.3 million did miss estimates by over $7 million, while its FFO of $0.65 was in line with the consensus.
2. Blackstone Mortgage Trust Inc. (NYSE:BXMT)
Coming in at the penultimate position, is Blackstone Mortgage Trust Inc (NYSE:BXMT), which LDR Capital made a further bet on in Q3 by raising its position in the REIT by 46% to 867,325 shares valued at $26.3 million. That makes its stake in BXMT more than twice as valuable as its third-largest holding MGP, showing the fund’s conviction in BXMT and its top stock pick SLG.
1. SL Green Realty Corp. (NYSE:SLG)
Topping the list of top real estate stocks to buy now is SL Green Realty Corp (NYSE:SLG), which has ranked as LDR Capital’s top stock pick dating all the way back to when the fund first added SLG to its 13F portfolio in the third quarter of 2019. The size of LDR’s holding has more than doubled since then, hitting 598,758 shares as of September 30. The position was valued at $42.42 million, representing 24% of the value of LDR’s 13F portfolio.
Like Blackstone, SL Green Realty Corp (NYSE:SLG) also has a large presence in New York City, being the largest office REIT in Manhattan, perhaps representing LDR’s conviction in the long-term prospects for one of the world’s greatest cities. Also like Blackstone, the company has an attractive dividend that yields 4.78% annually, with the company being one of the rare monthly dividend payers. SL Green Realty delivered FFO of $1.78 in the third quarter, trouncing estimates by $0.20.
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Disclosure: None. Top 10 Real Estate Stocks to Own According to LDR Capital is originally published at Insider Monkey.
